Centralized Solar

[ GWh of Electricity Saved: ]

4047

[ Jobs Impact: ]

Low

Medium

High

[ Budget Impact: ]

Low

Medium

High

[ Conventional Pollutants Reduced: ]

SO2

531 tons

NOx

438 tons

Hg

.007 tons

PM

81 tons

[ Megatons of GHG Reduced: ]

3.9

Overview

Solar panels are becoming extremely efficient at the same time that the price is dropping on the materials needed to create them. For years, solar power was dismissed as inefficient and too costly to compete with other sources of electricity. That was certainly true in 1954, when silicon cells were first invented in the U.S. and only turned 6% of the energy absorbed from the sun into electricity.1 But, today available solar cells are 21% efficient, with some research panels weighing-in at close to 44% efficiency.2 The result: power costs have fallen 48% since 2010 from $5 per watt to $2.60 per watt,3 making utility-scale centralized solar power plants a cost-competitive alternative to coal and, potentially, even natural gas. Moreover, Concentrated Solar Power (CSP) technology, along with molten salt storage, solves the problem of variability of solar power.4 Yet if the U.S. is to compete in the global clean energy market and take advantage of this energy resource, we need new policies to ensure continued scaling of solar generation, maturation of technology, and domestic market growth.

Analysis

The benefits of solar are clear. Solar plants often generate electricity during daily peaks of energy demand and are emissions-free. Though it costs approximately $153 to install a MWh of solar photovoltaic power today,5 many experts anticipate that increased efficiency in panels and lower prices on polysilicon and “balance of system components”6 will reduce costs to a very competitive $60 a MWh.7 This will enable solar to compete with other major power sources, even natural gas at $6 per million cubic feet.8 In states like Arizona, Nevada, California, New Jersey, and Hawaii, the solar resources could become competitive far earlier.

Yet for all of the good news, solar development in the U.S. is happening more slowly than overseas. This trend affects not only our ability to roll out solar power in the short-term, but it also means that our capability to compete for market share for solar panels and the rest of the supply chain is diminished.

In 2012, U.S. solar industry installed about 1,600 MW of large scale solar capacity.9 In addition, 1.3 GW of CSP is now being developed.10 But, small, new reforms and policies that increase solar installation growth 20% above current projections could add 1.5 GW more electricity to the grid over the next four years alone.11 If this additional capacity replaces coal generation, it would eliminate as much as 3.2 megatons of greenhouse gas emissions.12 That is the equivalent of removing more than four coal plants from the grid. The increased solar also would abate 429 tons per year of SO2, 354 tons of NOx, .006 tons of mercury, and 66 tons of particulate matter.13

Implementation

Easing the process for permitting and developing transmission, as well as giving solar equitable tax treatment as enjoyed by other renewable energy sources, would ensure that the U.S. continuing to be a global leader in solar power.

Allow Commenced Construction Costs Under the Investment Tax Credit

The Investment Tax Credit (ITC) is an important tool used to encourage construction of centralized solar. However, the ITC as currently written does not allow projects that have started construction but are not yet complete before the sunset date to be counted. As with any energy project, developing solar plants takes many years. But projects that may not be completed before the tax credits expire may lose investors. By allowing plants that have commenced construction prior to the expiration of the tax credit to qualify for the ITC, we could see an uptick of over 4 million MWh of new solar generation in the U.S.14 Recently, Congress addressed this issue as it applies to wind power and a few other forms of renewable energy, but solar remains at this disadvantage. Congress should make a similar change so that projects commenced prior to the ITC’s expiration may take advantage of its benefits.

Fast Track Permitting for Solar Developers

Like any large energy project, solar plants require permits from the federal government. However, this process of review is on a first-come, first-served basis. While that appears fair, the reality is that projects that are shovel-ready often languish behind projects that are still conceptual. The resulting delays cost those more advanced proposals in both time and financing, as financial backers often abandon those porjects due to interruptions. With the input of industry, FERC should establish a process by which developers are evaluated on their readiness. Upon a finding that a project is ready once the application has been approved, they should be given priority in permitting process.

Encourage New Transmission Corridors

Very few lines run from areas where most centralized solar will be built to the population centers that need more and cleaner electricity. The federal government can take several steps, including reforming the transmission siting process, accelerating interstate transmission compacts,15 and providing financing incentives and revenue sharing to build transmission lines. These policies will be covered in the PowerBook’s Electricity Transmission Component, which focuses on modernizing the American transmission system built decades ago, long before centralized solar was developed.

Based on EIA prediction that natural gas generation will remain about $66 per MWh. See United States, Department of Energy, Energy Information Administration, “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012,” Report, July 12, 2012. Accessed March 4, 2013. Available at: http://www.eia.gov/forecasts/aeo/electricity_generation.cfm.

Analysis based on an assumed growth of 1.5 GW over four years and data from the Energy Information Administration on capacity factor of energy, and on peer reviewed analysis of GHG output by energy source. See United States, Department of Energy, Energy Information Administration, “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012,” Report, July 12, 2012, Table 1. Accessed March 4, 2013. Available at: http://www.eia.gov/forecasts/aeo/electricity_generation.cfm; See also, Benjamin Sovacool, “Valuing Greenhouse Gas Emissions from Nuclear Power: A Critical Survey,” Article, Energy Policy, June 2, 2008, p. 2950. Print.

Calculations based on conventional pollutants of a 550 MW subcritical bituminous pulverized coal plant, assumed to be average sized for the PowerBook. See United States, Department of Energy, National Energy Technology Laboratory, “Subcritical Pulverized Bituminous Coal Plant,” Report. Accessed March 4, 2013. Available at: http://www.netl.doe.gov/KMD/cds/disk50/PC%20Plant%20Case_Subcritical_051507.pdf.

A full background on interstate transmission compacts is provided by the Council of State Governments. See Council of State Governments, National Center for Interstate Compacts, “The Electric Transmission Line Siting Compact Legislative Briefing: Background and Summary,” 2011. Accessed March 4, 2013. Available at: http://www.csg.org/NCIC/TransmissionLineSitingCompact.aspx.

Implementation

How to Use the PowerBook

The PowerBook is a menu of á la carte options, not a blueprint that requires every element to hold it together. It is designed to provide federal policymakers and regulators with a selection of policy ideas to help solve specific challenges in how our nation produces, transports, and consumes energy.

SECTORS

The PowerBook is divided into five economic sectors: power, transmission, buildings and efficiency, industry, and transportation. Each sector includes multiple components, which are specific elements of that sector that require some policy change. Components that impact multiple sectors, such as clean energy finance or regulatory reform, are included in a sixth cross-sector section.

COMPONENTS

Each component has three parts: a short overview, an analysis of the challenges and opportunities for energy, employment, and the environment, and an implementation section that outlines specific actions that Congress, the administration, or the independent regulatory agencies can take. The policy recommendations in the implementation section are intended to serve as frameworks for more detailed legislation or regulatory reform proposals.

The components in the PowerBook reflect the input from a broad group of business leaders, policymakers, analysts, and academics. We will update them regularly to add new policy ideas, revise existing proposals, and reflect progress made in Congress or through the regulatory process. We invite readers to provide us suggestions to build upon the proposals in our components or new policies we should consider adding. Please send us your comments via the contact page.

OUR ANALYSIS

The PowerBook provides both pragmatic ideas to move America toward cleaner energy and data showing the potential impacts that these policies could have on our energy systems and economy. By combining several datasets, from economy-wide to industry-specific, we have developed a basic methodology for each component to estimate the effects these policies would have on CO2, conventional pollutants, and domestic energy needs. While future, independent modeling will provide higher accuracy, the current metrics offer a general barometer of impact and a way to compare the effects of various components.